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FOR ADVISERS ONLY

Pension protection

Lifetime allowance protection

It is currently possible to protect benefits from a lifetime allowance charge as a result of the lifetime allowance being reduced (which the Government like to do quite often). This protection has the effect of locking the lifetime allowance at a certain rate, meaning the reduction won't apply. However, there are conditions which, if broken, will result in protection being lost.

Pre 6 April 2006 protection

Pensions legislation changed on 6 April 2006. However, it was possible to protect existing benefits.

Protecting benefits

It was possible for members of pension schemes set up before 6 April 2006 to protect the benefits that they already had. There were 2 types of protection - primary protection and enhanced protection.

Protecting tax-free cash

Members who had a right to more than 25% tax-free cash on 6 April 2006 and who didn't opt for protection (see above) may still have their tax-free cash entitlement protected. This is called scheme specific protection.

Tax-free cash protection on transfer

Protecting tax-free cash on transfer is, and always has been, one of the most popular queries we receive. More specifically, what happens if a member who is entitled to tax-free cash of more than 25% is transferring to another plan?

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.